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HOMEFRONT 13 OCTOBER 2016 WWW.BDLIVE.CO.ZA
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HOMEFRONT 1312OCTOBER 2016 WWW.BDLIVE.CO.ZA WWW.BUSINESSLIVE.CO.ZA JUNE 2020
MUST-READ
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2020/01/21 2:42 PM
Q&A with sector leaders PAGE 16
Capitalising on the 12J tax break PAGE 18
Commercial: adapt or die? PAGE 19
The clubhouse at Elaleni Coastal Forest Estate on the North Coast of KwaZulu-Natal
A new rural Lockdown’s knock-on effects PAGE 21
Until a few months ago, property buyers favoured compact urban spaces close to work, but since the impact of lockdown on people’s work and private lives, interest in SA’s gated communities is on the rise PAGE 17
HOMEFRONT SECTOR FEEDBACK
Talking property with Minister Lindiwe Sisulu
Lindiwe Sisulu, minister of human settlements, water and sanitation, answers questions concerning the real estate sector, including the lack of service from the Estate Agency Affairs Board and the new Property Practitioners Act WORDS: DEBBIE LOOTS :: PHOTOS: SUPPLIED
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fter having being unable to trade for just over two months during Levels 4 and 5 of the national lockdown, embattled property professionals returned to work on June 1 under strict health and safety protocols. In April, during the first stage of lockdown, a new property body – the National Property Practitioners Council (NPPC) – was formed to support and represent the industry at
national and government level, especially given these unprecedented times. Chaired by Vuyiswa Mutshekwane, CEO of the South African Institute of Black Property Practitioners (SAIBPP), the council comprises representatives from leading property groups as well as industry stalwarts such as Jan le Roux, CEO of the Real Estate Business Owners of SA; Neil Gopal, CEO of the South African Property Owners Association; Coenie Groenewald, CEO of the
and subsectors linked to real estate like removal companies, artisans including electricians and plumbers, and valuers.” With the possibility of Covid-19 restriction levels tightening up again in hotspots, the fight for the property sector’s survival is far from over. Here are the responses from Minister Lindiwe Sisulu (right) on matters that affect the sector on government level. Comments by Mutshekwane are included where relevant.
National Association of Managing Agents; and Leo Mlambo, president of the National Property Forum. “We are in discussions with the Estate Agency Affairs Board [EAAB], the department of human settlements and other industry stakeholders with regard to proposing measures to stimulate the industry going forward,” says Mutshekwane. “A return to work for real estate also means a return to work for many downstream activities
Q&A
Most of SA’s real estate bodies belong to the NPPC, which seems timeous considering the challenges presented by the lockdown and the lack of transformation in the industry. Do you see this as positive and will your department engage with such a body to address challenges in the industry?
Lindiwe Sisulu (LS):
The department and the minister are committed to ensuring transformation within the industry. Hence a specific chapter dealing with transformation is included in the Property Pracitioners Act [PPA]. Furthermore, the department and applicable entities have been in regular consultation with all organisations and stakeholders in the drafting of the act. The department will continue to have
Vuyiswa Mutshekwane, SAIBPP CEO and chair of the new National Property Practitioners Council
meaningful and constructive consultations with the sector in general as and when required. The Property Practitioners Regulatory Authority, which will be established as provided for by the PPA, will also have to apply this principle.
The EAAB has been in the news lately for lack of service delivery and serious accusations of breach of compliance. Have these issues been addressed to your satisfaction? You advised that you have been requested to intervene. LS: The EAAB, as the accounting authority, together with the executive management, has a responsibility to manage the institution. Should there be anything that the minister needs to be made aware of, the board will accordingly inform the minister. In instances where matters are drawn to the attention of the ministry by external parties, such matters are referred to the board for comment, inquiry and response. The EAAB is required to undertake regularly annual audits, and based on the 2018/2019 audit, it prepared and is implementing an audit action plan. Based on reports provided to the department, the EAAB is attending to the required weaknesses and deficiencies. The 2019/2020 annual audit will determine the efficacy of required
controls and compliance within the EAAB.
The PPA has been lauded as the “silver bullet” for transformation in the industry, yet there is criticism in this regard. Will we see effective transformation once the act has been promulgated? LS: The PPA is one of the few pieces of legislation that has a chapter that deals with transformation. It is trite that the property sector requires transformation and the pace to date has been less than satisfactory. The facts, figures and statistics bear testimony to this. We are, however, confident with the promulgation of the PPA; as a country, we will gain traction and speed in ensuring sustainable transformation in the sector. In this regard, reference is made to the requirement within the PPA to establish a transformation fund.
Vuyiswa Mutshekwane (VM):
Indeed, there is an urgent need to transform the property sector and the act is very progressive in this regard. However, for the intended outcome to be achieved, there needs to be a strong focus on supporting black business owners in the sector through enterprise development and capacitation. The transformation fund should also focus on increasing large-scale
black property ownership by funding black property developers, particularly those operating in the affordable housing space. The NPPC has made a submission to this effect in its inputs to the draft regulation, which is now out for public comment.
How will the transformation fund be funded? LS: The act makes provision in terms of Sections 21, 38 and 39 on the measures required to provide for the funding of the transformation fund. The draft regulations published will provide in more detail the procedures, processes and regulatory mechanisms that will govern the funding and funds in the fransformation fund.
When will the act be promulgated? LS: The act can only be promulgated once the regulations thereto are published and gazetted into
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law by the minister. The minister published the draft regulations under the act for public comment on March 6 2020 for a period of 60 days. However, a revised final date for public comments has been published in order to compensate for the negative impact of Covid-19 on the submission of comments. The department will in due course announce the dates for information sessions on the draft regulations. Once they are approved by the minister, the date of promulgation of the act will thereafter be published in the Government Gazette.
Many government departments and big businesses have announced packages to assist various industries during the national lockdown. The department of human settlements and the EAAB appear to have been
quiet or absent in this regard, although the industry suffered as much as or more than any other. Why is that? LS: The minister and the department, in consultation with the EAAB and other sector players, submitted a recommendation to the National Coronavirus Command Council (NCCC) that real estate services be allowed under Level 4 and/or Level 3 of the national lockdown. The EAAB is also considering the request for a payment holiday until February 28 2021 for all agents who are in arrears with payments and/or penalties and all exam fees. The EAAB has advised the department that it is in the process of considering all available measures and solutions to ensure that the sector is able to mitigate the effects of the Covid-19 pandemic.
A submission by the NPPC calling for the real estate sector to be reclassified as a Level 4 industry seemed to have received no response. Can you comment on this? VM: The NPPC has been in communication with the department of human settlements and the EAAB, which have pledged their support to see the industry resume operations as soon as possible. Through the department, industry’s submission was presented to the NCCC for consideration which, as we can now see, has yielded the desired results as the industry resumed operations as of Level 3. We will, however, continue to lobby for the reclassification to Level 4 so that we can continue to operate if the country should return to Level 4, which is likely given that we are now entering the peak of winter.
PUBLICATION ADVERTISING SALES
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HOMEFRONT
Balize Private Estate, Sibaya
Steyn City, Midrand
PROPERTY TREND
A new rural
Until a few months ago, property buyers favoured compact urban spaces close to work, but since the impact of lockdown on people’s work and private lives, interest in SA’s gated communities is on the rise
WORDS: DEBBIE LOOTS :: PHOTOS: SUPPLIED
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esults of the latest Residential Global Market Sentiment Survey from Savills show that the tide is changing in terms of buyers’ choice of home in the face of the Covid-19 pandemic. No less than 76% of respondents expect working from home to become more prevalent, whereas 73% think urban dwellers will want a green space when considering a new home and 61% expect a demand for rural living to be on the cards.
COUNTRY LIFESTYLE In SA, a rural lifestyle could mean moving to a small town such as Dullstroom in Mpumalanga, Riebeek Kasteel in the Western Cape or Rosendal in the Free
State. It could also involve relocating to a lifestyle estate. Thanks to their grounds, schools, medical facilities and multigenerational home options, some of these developments operate like small towns. Moreover, most estates offer fast Wi-Fi and 24-hour security, and are close to urban hubs. Lightstone Property statistics indicate the popularity of these estates has increased in the past decade. In 2010, they accounted for 12.7% of all homes sold in SA. By 2019 the figure rose to 14.7%. The Western Cape had the highest number of estate home sales between 2010 and 2019. The fact that gated communities are becoming more eco-conscious also
makes them appealing in the face of SA’s energy crisis and periodic droughts. Pam Golding chief executive Dr Andrew Golding says if social distancing becomes the norm, a growing demand for estate living can be expected. “Lifestyle estates are less accessible to the public, which limits exposure,” he says. “More spacious homes and outside areas also reduce the feeling of confinement during a lockdown.”
HOME OFFICES As many people are adjusting to working remotely, companies realise the financial benefits of such a system and might not be in a hurry to return to a traditional office setup. The fully functional home
office could well become the workplace of the future. Nico van der Meulen of Nico van der Meulen Architects runs his practice with his wife, Santa, between SA and Italy. He says most of their clients work from home. “There is a demand for bigger home offices and socialising spaces, and I foresee this trend growing,” he says. Many of SA’s lifestyle estate developers agree that the pandemic has changed the way people view future home designs and that an office should be part of the package or an add-on option. HomeFront asked some of SA’s lifestyle estates and developers how Covid-19 has changed buyers’ choice of location and future living spaces, and what they have available in line with these new expectations:
Sitari, Somerset West
A home office designed by Nico van der Meulen Architects
Estates: percentage of total homes sold in SA
Balize, Sibaya
17%
16%
15%
14%
13%
12%
Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19
11%
10%
Adlab Advertising MD Claudius Combrinck says Sitari Country Estate in Somerset West has had some good sales in spite of lockdown restrictions. “Our on-site sales office reported sales of nearly R20m for the month of May alone. Buyers are favouring lifestyle estates more than ever because they offer extended gardens that provide freedom beyond their immediate property boundaries,” he says. “With the recent surge in people working for home, astute residential developers are likely to consider home offices in future designs.”
Source: Lightstone Property
Balize Private Estate chief motivational officer Peter Cameron says buyers are re-evaluating their needs and desires in terms of future home investment. “With many of us having felt trapped in our homes during lockdown, gardens, meditation areas and space for a vegetable patch, for instance, will influence people’s decisions going forward,” he says. “Those with children will want extra space and there will be a more urgent need for sustainable living.” Cameron says Balize is the perfect lockdown escape
Sitari Country Estate, Somerset West thanks to its smart-ready homes with large verandas and views as well as a range of family amenities. Other new lifestyle estates on the North Coast offering ample green space and value include Elaleni Coastal Forest Estate and the more affordable Palm View Estate, where homes start from R500,000 and options with care facilities are priced from R750,000.
Steyn City, Midrand The Covid-19 pandemic has increased the demand for the ultimate live-work-play lifestyle, says Steyn City sales manager Lambert Bezuidenhout. “Given that the virus will be with us for some time, home has become a sanctuary,” he says. “If you are spending all your time in one space, the traditional lock-up-andgo apartment may feel a little cramped. That is why our 810ha back yard is so appealing – it provides ample space to walk, run and cycle for hundreds of kilometres.” Steyn City’s recently launched 104 on Creek addresses each of these new needs, offering an ideal compact living area, yet with all the space to move freely and securely, even under lockdown. Residents of these twoand three-bedroom luxury apartments get to enjoy the same sprawling parklands as those living in any of the estate’s larger homes. According to Bezuidenhout, the market’s tastes are already changing as people place greater
emphasis on convenience. The idea of a lengthy commute has fallen out of favour – a trend that has been boosted as the coronavirus crisis heralds the end of office-bound working, at least in the near future.
Domito, Fourways Robbie Cohen, marketing manager of Domito Developments in Johannesburg, also expects a shift in buyers’ home choices in a post-Covid-19 market. “Families will want to invest in developments that offer a variety of services where they can stay home without sacrificing certain comforts during possible further lockdowns,” he says. “Mixed residential developments that offer standalone duplexes of three or four bedrooms with private gardens and pools are
YO Residences, Fourways
perfect for families wanting to raise their children in a secure environment with extras such as a clubhouse with a gym, a restaurant, a playground, gardens and 24hour security.” The developer’s mixedresidential project YO Residences in Fourways comprises duplexes and apartments offering all of the above plus home automation for added efficiency should residents need to spend more time at home.
IGrow, Gauteng and Western Cape IGrow Wealth Investments general manager of new developments Gerhardt Jooste says it has had record sales during the past 60 days, regardless of the impact of Covid-19. “The drop in the interest rate is fantastic news for investors in general, but we
have also seen a lot of firsttime homebuying,” he says. Developments with 24hour security and excellent lifestyle facilities are now more affordable. “It is especially in areas close to growth nodes where we have seen a huge increase in sales,” Jooste says. “We are nearly sold out at Noah’s Village in Pomona as well as at Anglewood in Brentwood Park. Both are close to OR Tambo International Airport. “Record sales have also been achieved in Parklands in Cape Town, one of the fastest-growing suburbs in the country,” Jooste says. IGrow’s Clearwater Village in Johannesburg launches in July, offering homes designed with options to add an office space. Only 48% of the land will be developed, the remaining area providing secure green spaces for outdoor activities.
FOCUS ON: FLYT PARTNERSHIP FUND ADVERTORIAL
Money in your pocket Flyt Partnership Fund is a unique opportunity to capitalise on government’s Section 12J tax incentive and invest in property WORDS AND PHOTOS: SUPPLIED
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re the chips down? Think again. Capebased Flyt Property Investment recently launched an inventive way for South Africans to take advantage of government’s Section 12J tax incentive. Flyt Partnership Fund, which is restricted to R300m, allows investors to take part in the fund on a 100% loan basis. The R300m has been made available as loan capital to allow investors to participate as partners in the fund. Although a minimum investment of R1m is required, an investor needs only contribute 35% (in other words, R350,000 per R1m), as Flyt Property Investment will provide loan funding to cover the remaining 65%.
KEEN UPTAKE In essence, investors can make a R1m Section 12J investment by putting down only R350,000, which will be returned to them via their Sars tax refund (subject to their own tax rate). The company has also incorporated a bridging
loan facility for qualifying investors who would also like to borrow the 35% portion while waiting for their Sars refund. Flyt Property Investment MD Zane De Decker compares SA to a global tax haven, describing the opportunity as a fantastic way to get your tax back via government’s Section 12J incentive and invest it in property. When his team tested the market with their partnership product in February 2020, R24m was raised via word of mouth within a few days, with investors showing huge interest. “We increased our capacity to provide funding for this product and expect a keen uptake before the Sars Section12 J cut-off in July 2021,” he says. Section 12J investments have caught the eye of many South African investors and government has had to do an about-turn
by limiting the amount permitted to be invested to R2.5m per annum.
SPECIALIST FIRM Section 12J of the Income Tax Act was introduced in 2009 to encourage taxpayers to invest in local companies and receive a 100% tax deduction of the value of their investment. The investor receives a share certificate together with a tax certificate, allowing the invested amount to be deducted from their taxable income in the year that the investment is made. To date, South Africans have invested an estimated R10bn in the Section 12J sector. Flyt Partnership Fund, which is managed by Section 12J specialist investment firm Anuva Investments, holds assets in aparthotel developments in Diep River, Rosebank, the Foreshore and the Cape Town CBD.
GET IN TOUCH E-mail: zane@flytproperty.co.za flytproperty.co.za
WATER FALL
INVESTMENT SUMMARY Purchase Price
R1 650 000
10% Deposit
R165 000
90% Home loan
R1 485 000
90% Bond Repayment at 7.25%
R11 737.08
Levies *not payable for 1 year
R0.00
Rates *not payable for 1 year
R0.00
Approximate monthly rental income
R12 250
Surplus
R513
HOMEFRONT
Atlantic Hills, Abland’s industrial development near Durbanville, Cape Town
INDUSTRY UPDATE
Commercial property: adapt or die Where has Covid-19 left the commercial property sector in SA? HomeFront asked key players to comment on the office, retail and industrial sectors WORDS: KIM MAXWELL :: PHOTOS: SUPPLIED
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n-demand office space, e-commerce, inner-city gentrification and worker mobility trends have resulted in property investors exploring new models to turn a profit in a soft market. That is how Darryl Mayers and Andrew Wooler, joint CEOs of the Investec Property Fund, summarises what was shaping the commercial property market in early 2020. They point out that the commercial sector has benefited from delivering robust returns to institutional investors over 15 years, outperforming nearly every other local asset class. Within it,
the retail sector was particularly buoyant. But now this dynamic has shifted. As Absa’s head of commercial property and equity investments KlausDieter Kaempfer notes, the Covid-19 outbreak has had a systemic impact on the global economy, adversely affecting many asset classes across many geographies. It has been a tenant market for the past few years, meaning landlords have had to be “a lot more flexible”, according to Colin Anderson, COO of Rabie Property Group, a developer whose commercial and retail interests are focused in Cape Town’s Century City precinct. “The additional strain the lockdown is having on
businesses will result in a call for increased innovation when structuring deals. The commercial property sector is a very important cog of a healthy economy and if we are able to reshape and be inventive now, we will be in a good position when we experience a resurgence,” Anderson says. Growthpoint Properties SA CEO Estienne de Klerk agrees that, owing to a sustained depressed macroeconomic environment, local commercial property was under pressure before the health crisis hit. “The full impact of the lockdown for commercial property and its users will only become evident long after lockdown ends,” he
says. As SA’s largest JSElisted Reit, Growthpoint is invested in real estate across three continents.
Office sector “We dabble in all commercial sectors,” says Grant Silverman, marketing and leasing director at Abland, one of SA’s larger property developers. “The big question, of course, is where are offices going? “There’s been a trend even before Covid-19 where companies were looking at the cost of occupation. All the virus has done is to push it forward,” says Silverman. “In the past few years, people were consolidating their offices in central hubs rather than taking lots of satellite offices.
“The big question, of course, is where are offices going?” Grant Silverman, marketing and leasing director, Abland
Devmark Property Management leases some buildings to tenants, including Tyger Terraces III in Bellville Business Park, Cape Town
“We have found they want mixed use over a standalone office: the office with retail, gym, hotel and a grocery store.” For example, Abland’s Sandton Gate opened in early 2020 with P-grade office space. About 60% of it is let. But surely development pace has slowed? “We certainly have a number of buildings that haven’t filled as quickly as anticipated, so we’re not at the pace of two years ago,” says Silverman. Abland’s new P-grade urban building on Cape Town’s foreshore, 35 Lower Long, is in its final stages and attracting interest from smaller tenants. Silverman says Abland is negotiating with one or two larger tenants, despite the depressed market. With current high vacancy rates, the office sector is the most vulnerable, says François Viruly, associate professor of property economics at the University of Cape Town. Also under considerable pressure is the retail sector, forced to adjust to changing retailing patterns. “I predict that the short-term focus of investors will be on reducing vacancy rates and retaining tenants. There will be an equal concern to control the rise in operating costs, especially rates and taxes,” Viruly says. Rabie is using the pandemic as an opportunity to reconfigure its office offerings. “A small contingent will definitely transform entirely to a work-from-home operation, but we believe these would be smaller businesses in certain industries such as technology,” says Anderson. “We don’t believe the work-from-home model will suit all business, but some
may use a hybrid format, allowing staff to work more flexible hours. “Overall, businesses will be relooking how their space is configured for the short to medium term. This could mean using the same space – instead of reducing it – as they need to accommodate fewer people per square metre. We may find that companies which cannot operate effectively working from home will require more floor space to accommodate all their staff.” Anderson says its new Sable Corner building in Century City will be completed soon. It presents an opportunity to consider a flexible design: one apt for current physical distancing requirements that can also be adjusted for future needs. “Growthpoint is working on a solution to offer tenants offices for flexible lease terms in specific buildings to enable them to get through the current uncertainty,” says Paul Kollenberg, Growthpoint’s head of asset management for offices. In his view the lockdown has already impacted more severely on, for instance, the travel industry. On the upside, some tenants in the ICT sector and grocery delivery industries are expanding and require more space. Kollenberg says generally tenants have adjusted well and adopted technology for remote working, which might lead to decreased space needs in future. “The desire for less dense workspaces could either increase businesses’ space needs or have a net-zero effect, as some staff work remotely while others work at a greater social distance at the office.”
Retail outlook “The lockdown has hit this sector the hardest and in the most apparent ways. Included in the recipients of rental relief that Growthpoint has given are 1,494 small and micro retailers,” says Neil Schloss, Growthpoint’s head of asset management for retail. The company has invested in safety and sanitation, especially at its shopping centres nationwide. Most retail landlords are remodelling their cash-flow forecasts to accommodate expected weaker rental collections. “Landlords will also consider providing relief for office, industrial and hospitality tenants, where the lockdown severely impacted the tenant and where it is justified,” says Kaempfer. According to Silverman, commercial tenants are still signing leases; many are just watching their bottom line. Abland has seen an uptick in small retail centres and is building “a fantastic pipeline of these sorts of retail centres going forward”. Its retail centres Waterfall Ridge (in Midrand) and Jackal Creek (in West Rand) have had construction delays but are tenanted and on track for completion in Q1 2021. “They’re both smaller convenience retail shopping centres, because the trend is moving away from big malls towards convenience closer to home,” says Silverman. Schloss notes that retail loss sectors are showing. “Recovery is going to be particularly difficult for restaurant, entertainment and travel tenants, for example. In addition, the retail sector is going to have to face challenges such as Edcon going into voluntary business rescue,” he says.
Devmark Property Management manages sectional title housing schemes, affordable housing, retail centres, commercial properties, light industrial properties and homes. MD Heinrich Ehlers points out that numerous businesses were without income for April and May. Most sought relief from landlords during this time. “Many realised that they cannot afford their rentable space,” he says. “In some cases, their needs have changed and they can easily operate in a smaller space.” Devmark offered some tenants relief packages if they signed and extended their lease agreements. “With the current market situation, it’s more attractive for us to retain a tenant at a reduced rental than to try to source a new tenant,” says Ehlers. “This way the tenant gets relief during the tough current economic climate and we get to keep our tenant for another couple of years.”
Industrial activity There is one sector showing positive market movement. “The industrial sector is an interesting one,” says Silverman. “The manufacturing side has definitely slowed but distribution, storage and data centres are picking up in SA. Everyone is jumping on the bandwagon with online shopping. It’s nothing new; the push has just been accelerated. “We launched a new industrial building called Atlantic Hills on the N7 near Durbanville. The development is multitenanted. Units in this precinct range from large warehouses to mini units. All of a sudden, distribution
HOMEFRONT
VREDEHOEK, CAPE TOWN Rabie Property Group’s Sable Corner in Century City, Cape Town VREDEHOEK, CAPE TOWN
La Lucia Mall in KwaZulu-Natal is owned and managed by Growthpoint Properties
which operates mainly in and warehousing enquiries SA and the UK. have multiplied.” VREDEHOEK, CAPE TOWN Locally, 83% of Tradehold’s Growthpoint industrial total gross lettable area of head of asset management 1.5-million square metres Errol Taylor is more held through its subsidiary cautious. He says while Collins Group comprises most industrial businesses large-format industrial and came to a halt during the distribution centres leased lockdown, some of this to local corporates on longsector’s users continue to term contracts. operate and a handful are Tradehold joint CEO even thriving. From R2.495 million (incl. VAT) no transfer duty Friedrich Esterhuyse says Manufacturers and the company is seeing transporters of essential the benefits of “fortuitous goods and distribution • Back-up power supply From R2.495 million (incl. VAT) no transfer duty timed restructuring of the centres of online and brick• Sea, mountain and city views business” that started some and-mortar retailers selling OEK, E TOWN CAPE TOWNVREDEHOEK, VREDEHOEK, CAPE VREDEHOEK, TOWN CAPE TOWN CAPE VREDEHOEK, TOWN CAPE TOWN VREDEHOEK, VREDEHOEK, CAPE CAPE VREDEHOEK, TOWN TOWN VREDEHOEK, CAPE TOWN CAPE TOWNVREDEHOEK, CAPE VREDEHOEK, TOWN CAPE TOWN From R2.495 million (incl. VAT) no transfer duty two years ago, aimed at essential products are • Inspiring contemporary design • Back-up power supply increasing its flexibility and among those that continue. by award winning architects • Sea, mountain and city views resilience to adapt easily to “Realistically, however, • Back-up power supply • Secure parking and excellent security changes in the environment. we can expect that small • Inspiring contemporary design • Sea, mountain and city views In the UK, the company and large businesses will by award winning architects • 10 exclusive apartments owns a property portfolio face enormous challenges • Inspiring contemporary design • Secure parking and excellent security • 1 penthouse with private jacuzzi of four shopping malls in the coming months,” by award winning architects and various commercial says Taylor, referencing • 10 exclusive apartments • 1 penthouse suite with private jacuzzi • Secure parking and excellent security buildings in Greater London the country’s heavy • 1 penthouse with private jacuzzi through wholly-owned unemployment burden and • 10 exclusive apartments subsidiary Moorgarth. Some limited cash reserves. • 1 penthouse suite with private jacuzzi www.TheVera.CapeTown • 1 penthouse with private jacuzzi are let to Boutique, a 90% One commercial property T) lion )95 no no million transfer (incl. transfer VAT) From (incl. duty duty no R2.495 VAT) From transfer no From million R2.495 transfer duty R2.495 million duty VAT) From (incl. no(incl. R2.495 VAT) transfer VAT) nomillion transfer duty noProperties From transfer From (incl. duty R2.495 R2.495 VAT) duty no million From million transfer R2.495 From (incl. (incl. duty R2.495 VAT) million VAT)no no million transfer (incl. transfer From VAT) (incl. duty duty no R2.495 VAT) transfer no From million transfer duty R2.495 (incl. million VAT) no(incl. transfer VAT)duty no transfer duty Exxaro’s new headquarters in(incl. Centurion, another Growthpoint development subsidiary of Tradehold exception is duty Tradehold, • million 1 penthouse suite with private jacuzzi
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offering flexible office space on short-term leases. “Unlike co-working, where different entities share desk space in an open environment, Boutique provides clients with a traditional private office environment. This allows them to manage for themselves the hygiene regimes imposed by the pandemic conditions,” Esterhuyse says. “With an occupancy level of 92% of its 4,500 individual workstations, we believe this business is excellently positioned to benefit from the new workfrom-home culture that we anticipate will remain in place after the pandemic, coupled with a need of businesses for a physical presence in major cities, accommodating fewer employees more flexibly.” The absence of longterm planning around
a pandemic makes it challenging for commercial developers and landlords. Tenants require flexible leasing structures, green elements (for lower operating costs) and adaptable office formats that accommodate remote workforce portions or more space-aware footprints. The future of commercial property will be about the provision of a service rather than the selling or letting of space, predicts Viruly. “It means that property companies will start resembling hotel companies. When you rent a hotel room, you don’t ask yourself how many square metres you’ve rented – you are primarily interested in the service that will be provided. Tenants in the commercial property sector will be placing a considerable emphasis on facility management.”
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ORANJEZICHT, CAPE TOWN
VREDEHOEK, CAPE TOWN
ORANJEZICHT, CAPE TOWN ORANJEZICHT, CAPE TOWN ORANJEZICHT, CAPE TOWN
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From R2.495 million (incl. VAT) no transfer duty
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VAT) no transfer duty
www.TheCedar.CapeTown www.TheCedar.CapeTown
www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheCedar.CapeTown www.TheVera.CapeTown www.TheCedar.CapeTown
*T&Cs apply
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HOMEFRONT HOT TOPIC
Negotiating lockdown’s knock-on effects Now that deeds offices have reopened, property transfers are possible again. With the expectation that the real estate value chain will be operational once more, what will be the after-effects of Covid-19 on buyers and the property industry at large? WORDS: HELÉNE MEISSENHEIMER :: PHOTOS: SUPPLIED
T
he real estate sector was particularly hard hit during the lockdown because most estate agents were unable to earn an income as property transfers were halted by the closure of the deeds offices. Property sales, already down because of the recession, dropped even further as the economy ground to a halt. Buyers were also prohibited from physically viewing the properties they wanted to buy, which added to the frustration of all parties involved. However, thanks to prior advances in property technology, estate agents were able to conclude successful sales, many of them pending physical viewings. According to Berry Everitt, CEO of Chas Everitt International property group, for estate agents who were equipped with the right technology and knowledge to easily switch to remote facilitation of home sales and rentals, it made all the difference. Personal contact with buyers and sellers was always an integral part of
Linda Erasmus, CEO, Fine & Country Sub-Saharan Africa
the real estate business but social distancing forced a more tech-assisted and virtual approach. Numerous estate agencies now market their listed properties with virtual property tours available online. “I think technology such as Zoom and Facebook Watch will remain postlockdown and create many efficiencies,” says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa. Last month, property support structures reopened while real estate agencies waited in the wings. From June 1 all estate agents started operating subject to a strict protocol of health and safety regulations. According to Linda Erasmus, CEO of Fine & Country Sub-Saharan Africa, most estate agencies were ready to open their offices with the correct procedures in place as under lockdown Level 3. “Clients sign the health security forms before they attend any viewings and sellers have a set of rules to follow. The crucial activities, however, can be concluded and although
the process is burdensome, it can be managed and is welcomed by the real estate sector,” she says.
WIN-WIN FOR BUYERS The latest rate cut on May 21 brought the interest rate to the lowest it has been in almost five decades. Combine that with the transfer costs waive for properties of up to R1m, and buying your first home is now an attractive proposition. “The interest rate is at a record low, stock levels are up and prices are under pressure. It is the ‘perfect storm’ for first-time buyers especially, who can take advantage of the environment and the transfer-duty savings,” says Seeff Property Group chairman Samuel Seeff. Craig Tappan, national business development manager at Mortgage Max, adds that recent rate cuts may make it more affordable to buy than to rent – another factor that could entice first-time buyers into the market. Seeff agrees that affordability has improved drastically. “If you had purchased a R1m property at 10%, your gross monthly income requirement would
Berry Everitt, CEO, Chas Everitt International
have been about R33,000 per month. Now it would have reduced by more than R5,000,” he says. “That’s a significant benefit for buyers taking advantage of the interest savings and transfer duty exemption.” According to Seeff, market conditions are especially favourable for the low- to mid-market range up to R1.5m (and even up to R3m in some areas), where the company has seen the bulk of activity. “Buyers who are able to buy now have more property to choose from as stock levels are higher,” Seeff says.
SELL OR WAIT? There is no blanket answer to this question as it all depends on your reasons for selling. Goslett says homeowners who want to sell and buy a new home have to keep in mind that waiting for the economy to recover so that they can sell for a higher price will also mean they will be buying in a restored economy with higher house prices. There is also the risk that interest rates will rise then, impacting affordability.
Samuel Seeff, chairman, Seeff Property Group
Everitt’s advice to sellers is not to hold back or delist at this stage but to conclude a sale as soon as possible even if they have to lower their asking price somewhat. “Those planning to upgrade will find that the price of their new home is also likely to be reduced – and by a far greater amount than what they may ‘lose’ on the sale of their existing home,” he says. As for second investment properties, Goslett says sellers should consider affordability. “If house prices do deteriorate and you struggle to balance the holding costs, you may be forced to sell and find yourself in a worse position than if you sold earlier.” According to Erasmus, smart investors would hold on to their property investments at the moment, if possible. “Do your homework – you need to be informed to maximise profit when buying or selling,” she says.
RELIEF PACKAGES During the lockdown many homeowners were faced with a drop in income or even no income at all, so a variety of relief packages
Adrian Goslett, regional director and CEO, RE/MAX of Southern Africa
were made available by the country’s major banks. FNB offered homeowners one of two solutions, says Hayden Giger, growth head of FNB Private Bank Lending. Clients who were directly affected by the outbreak could apply for the Covid-19 payment break loan, which meant the bank covered the client’s full bond repayment for up to three months to help them stay up to date with current repayments and keep their credit profile intact. Thereafter the client would begin approved repayments over a flexible period with zero fees at the prime interest rate. The second option is the home loan payment break, where their debit order is suspended for three months. At the end of this period, the client would be required to pay a revised monthly repayment. Absa’s comprehensive payment relief programme allows customers the choice to defer payments on credit products, including home loans, for a period of three months, explains Geoff Lee, managing executive for home loans at Absa Retail and Business Bank SA.
Thozama Mochadibane, head of Customer Delight, Nedbank Home Loans
Nedbank customers have three options, says Thozama Mochadibane, head of Customer Delight at Nedbank Home Loans. If the customer’s income was impacted temporarily owing to Covid-19, they can defer their monthly home loan payments or pay only 50% of their instalment for three months, after which the arrears are restructured for a fresh start. In the event of permanent loss of income, such as retrenchment or the closure of a small business, solutions would be tailored based on the customer’s individual circumstances. Standard Bank, too, offers a variety of relief packages for which customers can apply if their income has been directly affected by the coronavirus crisis.
HOME LOAN APPLICATIONS Giger has noticed an increase in high loan-tovalues and reliance on variable income. Given the significant uncertainty about the recovery rate of the economy combined with the anticipated reduction in income, FNB has decided to take a cautious approach
Geoff Lee, managing executive for home loans, Absa Retail and Business Bank SA
towards the approval of home loan applications. Lee says a customer’s ability to take on additional debt is assessed carefully when processing a loan application at Absa. That has not changed because of Covid-19. Mochadibane says Nedbank has had a drop in the number of applications for home loans during lockdown, but the approval rate is unchanged. She says many customers may have suffered partial or total loss of income, but there are others who benefit from the recent 2.5% reduction in the prime lending rate. In these unprecedented and uncertain times, it is of critical importance to have a sound credit score if you are applying for a home loan. Tappan says Mortgage Max is all about responsible lending and a healthy credit rating is one of the key factors in determining whether an applicant can afford to repay a home loan. It is a basic requirement for any credit assessment. The good news is that none of these Covid-19 debt relief packages would affect a customer’s credit rating negatively.
Hayden Giger, growth head, FNB Private Bank Lending
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